The Pound Sterling has fallen against the US Dollar, with the GBP/USD trading close to 1.3150. This decline is due to worries about the UK’s fiscal management and political stability. The UK government has chosen not to raise income taxes before the November budget, opting instead to tackle a £30 billion deficit through other revenue sources. Despite some positive movement on Thursday, the GBP/USD pair was affected by disappointing GDP growth data and the Prime Minister’s cancellation of tax hikes. The reopening of the US government is expected to impact the market by releasing delayed economic data, including the widely awaited September Nonfarm Payrolls report next week.

Impact Of US Government Reopening

The weakness of the US Dollar helped the GBP/USD rise to a two-week high of 1.3197 due to the US government reopening and upcoming economic reports. However, traders are cautious about potential future US government shutdowns and how that might affect the availability of economic data and the Federal Reserve’s decisions. The UK’s choice to eliminate planned income tax increases is causing significant market uncertainty ahead of the November 26 budget. With a £30 billion fiscal gap to address, this decision raises concerns about the government’s ability to manage public finances. Public debt has been high, near 99% of GDP for much of 2025, reminding many of the market instability experienced in 2022. This situation suggests that the Pound Sterling may see increased volatility in the coming weeks. One-month implied volatility for GBP/USD has risen to over 8%, up from about 6% last month. Traders might explore strategies like straddles or strangles on Cable to capitalize on potential significant price movements after the budget is revealed. Meanwhile, the US Dollar is losing ground as we await the delayed economic data from the government reopening. The market is eager for the October inflation and job figures to understand the Federal Reserve’s next steps. September’s Core PCE inflation rate was still at 2.8% year-over-year, leaving the Fed’s decision uncertain.

High Stakes of Delayed US Economic Data

The lack of data makes trading US interest rate futures risky at the moment. Currently, fed funds futures indicate a 60% chance of a 25-basis-point rate cut on December 10. A strong inflation or jobs report next week could rapidly change these odds, causing significant fluctuations in the dollar. Create your live VT Markets account and start trading now.

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